SEMINAIRE DE RECHERCHE EN ECONOMIE - GATE Lyon Saint-Etienne : MATHIEU SANCH MARITAN

Mathieu Sanch Maritan, Economix (UMR 7235), and associate researcher in CESAER (UMR 1041), University Paris Nanterre présentera un séminaire intitulé : Local labor market fluctuations and city size : evidence from the French Air Force base closures.

Thème de recherche / Main topics : Resilience ; Common factor panel ; Synthetic control ; Heterogeneous effects ; Urban-Rural gradient

Résumé / abstract  : This article explores the role of city size on unemployment volatility. We present a simple new economic geography model of labor pooling to illustrate how the relation between economic shocks and local unemployment can be mitigated by the city size. Then, we exploit a quasi-natural experiment by studying the economic impact of 12 French air force base closures to test the prediction of our model. We use synthetic control methods and interactive fixed effects to construct a credible counterfactual for each employment zone which experienced a closure. By analyzing quarterly local unemployment data, we show that air base closures increase local unemployment. Despite that air base closure lead to a rise in local unemployment in quarters following the closure, on average areas absorb negative shock in 14 quarters. Moreover, our results reveal some heterogeneity in the local economy’s resilience. In line with our theoretical model, we show that city size is a relevant explanation for the observed heterogeneity in resilience : the unemployment rate is less affected in denser area by a relative equal-sized shift in labor demand.

Co-authors : Lionel Védrine (UMR CESAER)

Mathieu Sanch Maritan

Local labor market fluctuations and city size : evidence from the French Air Force base closures